MMM scheme ‘tricky to probe’

Lesotho Times - - Business -

JO­HAN­NES­BURG — The in­ter­net-based na­ture of MMM, South Africa’s lat­est al­leged Ponzi scheme, is pos­ing dif­fi­cul­ties for au­thor­i­ties seek­ing to prose­cute the per­pe­tra­tors.

The SA Re­serve Bank, which is man­dated to in­ves­ti­gate th­ese schemes and or­der the re­pay­ment of in­vestors’ money if breaches of the Banks Act are found, would strug­gle to con­duct an in­spec­tion and prove that the scheme was car­ry­ing on the busi­ness of a bank through ac­cept­ing mon­e­tary de­posits from the pub­lic with­out reg­is­ter­ing as a bank.

“It does not fall within the am­bit of the Bank,” Re­serve Bank spokesman Candice Jef­freys said on Wed­nes­day. It had re­ferred the mat­ter to the Na­tional Consumer Com­mis­sion (NCC) last year.

Ad­min­is­tra­tors of the scheme, spear­headed by con­victed Rus­sian fraud­ster Sergey Mavrodi ( pictured), said in a Face­book post at the week­end that it would be closed down af­ter it failed to pay out promised re­turns of 100 per­cent a month.

“We can eas­ily pay 30 per­cent per month, and we proved it in prac­tice in many coun­tries, but 100 per­cent is too much even for us,” they said.

They promised to trans­fer par­tic­i­pants’ bit- coin-linked Mavro — the scheme’s cur­rency of choice — to each of the MMM struc­tures in 11 coun­tries, but Mavrodi has since re­port­edly gone to ground. Bit­coin is a dig­i­tal cur­rency that is cre­ated and held elec­tron­i­cally.

The scheme has at­tracted the at­ten­tion of the lo­cal po­lice.

Hawks spokesman Hang­wani Mu­laudzi said the in­ves­ti­ga­tion was still in its early stages and was on­go­ing. The Hawks sought as­sis­tance with the case from the South African Bank­ing Risk In­for­ma­tion Cen­tre (Sabric) and the Fi­nan­cial In­tel­li­gence Cen­tre.

Mr Mu­laudzi said the case was chal­leng­ing be­cause every­thing was con­ducted on the in­ter­net, mak­ing it im­pos­si­ble to tell how many peo­ple fell vic­tim to the scheme.

“We don’t know how many peo­ple are af­fected by the scheme be­cause it was all done through the in­ter­net,” he said. “Peo­ple are not com­ing for­ward so that we are able to deal with this mat­ter.”

The Hawks were work­ing off doc­u­ments sent to them by the NCC, which looked into the scheme as far back as last year.

NCC spokesman Trevor Hat­tingh said no mem­bers of the pub­lic re­ported MMM’S ac­tiv­i­ties to the or­gan­i­sa­tion.

“In Au­gust 2015 the NCC was in­formed by the South African Re­serve Bank and the Fi­nan­cial Ser­vices Board about sus­pi­cious bank­ing ac­tiv­i­ties that are sim­i­lar to what would or­di­nar­ily be found in pyra­mid schemes,” he said. “The NCC started to en­gage the South African Po­lice Ser­vice on the mat­ter in Septem­ber 2015.”

Mr Mu­laudzi said the po­lice were still to press charges as they were still con­duct­ing an in­quiry.

“They (the NCC) just gave us the doc­u­ments, and so we are work­ing on the doc­u­ments that we have re­ceived,” he said.

Mr Mu­laudzi said the Hawks had not found the per­son re­spon­si­ble for set­ting up the scheme in SA, “although there is a par­tic­u­lar per­son that has been pointed (out), but we have to make sure we con­nect that per­son to (the) scheme”. — Bdlive

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